Definitions
In plain terms
Starting at 100, a 5% return moves the index to 105; a later 10% loss moves it to 94.5.
Technical
Each level equals the prior level multiplied by one plus the periodic return, subject to return variant, calendar, missing-data, and rounding policies.
Scope
It is a normalized measurement series, not necessarily a governed market benchmark.
Formula
I_t = I_(t-1) * (1 + r_t)I_t=I_{t-1}(1+r_t)| Symbol | Meaning | Unit |
|---|---|---|
I_(t-1) | previous return-index level | index points |
r_t | period return | decimal return |
Output unit: index points
Examples
- A governed calculation records return index with its exact basis, effective time, source, and units.
Common misconceptions
- Return Index does not have one universal treatment without the applicable methodology, event terms, and data context.
Concept relationships
Prerequisites
Related
Where this concept is used
Evidence and governance
- S&P Dow Jones Indices Index Mathematics Methodology S&P Dow Jones Indices · first party methodology
Supports: preferred label, short definition, technical definition, formula
Limits: Authoritative for the provider's indices; conventions are not universal defaults for every index or security-level return series.
- Fintech Builder Glossary Definition Contract The Fintech Builder · internal governed contract
Supports: variant distinction
Limits: Defines governed platform behavior rather than claiming these policies are universally prescribed by external McClellan methodology.
- Reviewed by
- fintech-builder-owner-approved
- Last reviewed
- 2026-07-27
- Next review
- 2027-07-27
- Record status
- published